The seemingly unstoppable dollar

Market Movers: Weekly Technical Outlook

Global Data Highlights

Monday, August 4, 2014

1:30 GMT             Australian Retail Sales (June)

This will be the first in line of an event-packed week for The Land Down Under that could either make or break the fortunes of AUD strength.  If the RBA were to have its druthers it would prefer their currency to fall, as RBA Governor Glenn Stevens has mentioned time and again, and Retail Sales could help get that ball rolling if it were to continue its recent string of lackluster results.  Last month’s release saw Retail Sales decline 0.5% and was the fourth consensus miss in a row.  Strangely enough, this figure tends to be a little streaky, beating consensus for six straight months previous to this streak and missing consensus for five straight months before that streak.  Therefore, seeing another disappointment may not be that out of the question.

Tuesday, August 5, 2014

4:30 GMT             Reserve Bank of Australia Interest Rate Decision and Statement

Despite the jawboning attempts of RBA Governor Stevens, the AUD/USD hasn’t fallen from the lofty 0.93-0.95 area.  While the Reserve Bank of New Zealand’s Governor Graeme Wheeler seems to effortlessly talk his currency down whenever he desires.  It’s almost like a “boy who cried wolf” situation in that Wheeler issues veiled threats and then follows up with intervention if the market doesn’t heed his warning, whereas Stevens talks a lot, but rarely acts.  Watch for the RBA to turn slightly dovish, but if no action is taken, the market may call Stevens’ bluff and bid the AUD/USD higher.

9:00 GMT             European Retail Sales (June)

This has been a surprisingly resilient metric in the euro area as it has beat expectations in four of the last five releases.  The danger in constantly outperforming though is suddenly the market begins to anticipate it, and if the number can no longer deliver, traders punish the currency.  That is where we lie for this release as consensus is expecting a 0.4%, a lofty goal that could be difficult to achieve and could weigh on the euro as we approach the ECB decision later in the week.

14:00 GMT          US ISM Non-Manufacturing PMI (July)

Much of the sizzle of this release has been removed due to its time and date of release.  In fact, most US data releases for this week will pale in comparison to the releases of the previous week, therefore garnering very little fanfare.  Regardless, the narrative in the US is one of recovery, growth, and an eventual interest rate hike by the Federal Reserve, and the service sector of the economy (which this measures) is a vital cog in that machine.  Expectations are slated for a continued strong showing at 56.6 and would signal the fifth straight improvement overall if achieved.

22:45 GMT          New Zealand Employment Change and Unemployment Rate (Q2)

The Kiwi economy has been on an incredible run over the last year or so as the RBNZ hiked interest rates, the Trade Balance consistently delivered surplus, GDP was broadly strengthening, Consumer Sentiment was surging, NZD/USD strength didn’t seem to be creating a headache, and Unemployment fell to 6.0%.  Then suddenly, milk prices started to drop and everything seemed to hit the fan: Business Confidence tanked, the RBNZ indicated they weren’t hiking anymore, and the NZD/USD began falling like a rock.  Since businesses are typically ahead of the economic curve, the confidence drop in that sector is concerning and could signal that they have started to take it easy on the hiring front.  If that is the case, be wary of a disappointing release here and a further sell-off in Kiwi currency pairs.

Wednesday, August 6, 2014

8:30 GMT             UK Manufacturing and Industrial Productions (June)

After stringing together a few impressive months that helped to buoy the GBP/USD above 1.70, sterling has lost a bit of its luster in the latter half of July, challenging 1.68 as we go to press.  Both of these figures disappointed last month by logging negative figures and if that result is repeated, more severe profit-taking could be in store as the Federal Reserve could take the lead as being the first anticipated major central bank to raise interest rates.

Thursday, August 7, 2014

1:30 GMT             Australian Employment Change and Unemployment Rate (July)

The Australian Employment situation has been a little strange in that overall Employment Change has been respectable in 2014 by logging more positive results than negative, but the Unemployment Rate has actually gotten worse.  Perhaps that is a good sign in that more jobs engenders more participation and, by and large, the market appears to be interpreting it that way as the AUD/USD maintained historically high levels.  If the RBA is successful at talking down the AUD, a decent result here could present a rallying opportunity.

11:00 GMT          Bank of England Interest Rate Decision

The BoE announcement is typically a very quirky proposition as it hasn’t had any deviations for ages, and it is followed very closely by the much more ballyhooed ECB decision 45 minutes later.  Therefore, don’t expect much fanfare for this release as they will most likely keep the status quo and offer no new nuggets for the future.

11:45 GMT          European Central Bank Interest Rate Decision, Statement, and Press Conference

The recently announced sanctions on Russia in relation to the Ukrainian quagmire could be a significant blow to European growth and that is likely evident to ECB Governor Mario Draghi.  Draghi has indicated that the ECB is ready to act on additional measures including quantitative easing if it feels the need, and this Russian situation may be the catalyst for that action.  If Draghi hints that QE is coming soon, the EUR/USD could be dropping significantly more than it has already and could continue some of the exciting recent price action we have seen.

Friday, August 8, 2014

2:00 GMT             Chinese Trade Balance (July)

Be wary of early leaks of this release as news agencies will try to be the first to report, and overall, this has been a bright spot in the recent Chinese recovery.  Last month’s $31.6B didn’t quite achieve the $37.3B expectation, but was strong nonetheless.  The likely only way this creates much fanfare is if it misses by a wide margin or falls in to deficit as it did back in March of this year.  Otherwise, this event may be chalked up as an “also-ran” and barely move the needle.

4:00 GMT             Bank of Japan Interest Rate Decision

Another month, another BoJ decision where Governor Haruhiko Kuroda tells us that economic figures are in-line with expectations after the sales tax increase in April of this year and that they won’t be adding to Quantitative and Qualitative Easing once again.  Kuroda just had a speech this past week where he said as much, so despite the woeful figures in both Household Spending and Retail Sales over the past couple months, the BoJ may be more inclined to sit on their hands and wait.  Regardless, US economic strength could boost the likes of USD/JPY despite the BoJ’s passiveness and help break the monotonous sideways action in the pair.

8:30 GMT             Canadian Net Change in Employment and Unemployment Rate (July)

The Employment release in Canada last month lived up to the pattern by once again switching from a positive to a negative result.  That makes eight straight “switcheroos” for this release, which is bordering on ridiculousness at this point.  However, if the positive-to-negative pattern continues, look for a strong release that beats the 25.4k consensus and gives the CAD all the more reason to battle back against its rivals.

 

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About the Author
Matt Weller

Senior Technical Analyst for FOREX.com. Matt has actively traded various financial instruments including stocks, options, and forex since 2005. Each day, Matt creates research reports focusing on technical analysis of the forex, equity, and commodity markets. In his research, he utilizes candlestick patterns, classic technical indicators, and Fibonacci analysis to predict market moves. Matt is a Chartered Market Technician (CMT) and a member of the Market Technicians Association. You can reach Matt directly via e-mail (mweller@gaincapital.com) or on twitter (@MWellerFX).

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